Price gouging at the pump: the regulator's empty tank

  New Zealand imports not a single barrel of crude oil from the Persian Gulf. Not one litre of unrefined petroleum arrives here from Saudi Arabia, the UAE, Kuwait, Iraq or Iran. And yet, since the United States and Israel struck Iran on 28 February 2026 and the Strait of Hormuz effectively closed, New Zealanders have watched pump prices rise by around 50 cents a litre for petrol and more than 70 cents a litre for diesel — one of the sharpest retail spikes in the developed world.

This is price gouging.

It is fuel companies exploiting a global crisis to extract profits from consumers who have no choice but to fill their tanks. In the same period, South Korea — which sources 70 per cent of its crude from the Gulf — introduced hard price caps. Hungary capped prices immediately. China held increases to 11 per cent. India to five per cent.

  Here, the Commerce Commission told us to download the Gaspy app.

  That is the story of this crisis in New Zealand. Not a supply catastrophe — but price gouging enabled by a regulatory vacuum, a structurally captured fuel market, and a Commerce Commission so hobbled by design that its most powerful consumer intervention is recommending a smartphone app. Across the Tasman, Australia’s competition watchdog opened a formal investigation into whether companies were lifting prices ahead of actual cost increases. Here, we got a press release.

What is actually happening in the Strait of Hormuz

The scale of the disruption is genuinely historic. Brent crude surpassed US$100 per barrel on 8 March 2026 — the first time since 2022 — rising to US$126 at its peak. The Dallas Federal Reserve described the closure as the largest geopolitically-driven disruption to global oil supply in history, surpassing the 1973 Arab oil embargo. Since the conflict began, Brent has risen roughly 65 per cent.

  Around 20 million barrels per day normally pass through the strait — about 20 per cent of global oil consumption. The traffic has slowed to a trickle. Major shipping companies including Maersk, CMA CGM and Hapag-Lloyd have suspended transits. Insurance premiums for vessels attempting to cross have risen from 0.125 per cent to between 0.2 and 0.4 per cent of ship value per transit. The IEA has made its largest-ever strategic reserve release — 400 million barrels — and even that is estimated to cover only about 20 days of normal Hormuz flow.

  The destinations of this oil matter enormously to understanding New Zealand's position. 84 per cent of crude oil flowing through the strait is bound for Asian markets — primarily China, India, Japan and South Korea. Europe gets 12-14 per cent of its LNG from Qatar through the strait. The United States, which barely sources from the Gulf, still sees price rises because, as a Rice University economist noted, "if something goes wrong anywhere, the price goes up everywhere".

Where New Zealand's fuel actually comes from

New Zealand's fuel supply chain has a critical and frequently misunderstood architecture. Since the closure of the Marsden Point refinery in 2022, New Zealand imports all its refined fuel. It does not buy crude oil from the Middle East. Instead, it buys finished petroleum products from refiners in Asia.

  As of 2025, South Korea supplies roughly 48-51 per cent of New Zealand's fuel imports, Singapore 31-33 per cent. Those Asian refineries in turn source their crude from the Middle East — predominantly Saudi Arabia and the UAE. This is the critical link in the chain. New Zealand's exposure to the Hormuz crisis is real, but it is an indirect exposure: a pricing exposure, not an immediate supply exposure.

  This distinction matters enormously. Finance Minister Nicola Willis confirmed that as of mid-March, fuel companies had reported no cancelled orders, and combined national fuel stocks equated to around 49-57 days of cover across petrol, diesel and jet fuel. Ten vessels were arriving in the week of 16-22 March. There is no supply interruption to New Zealand — yet prices have spiked as if there is.

The price spike: what happened at the pump

Nationwide petrol prices rose from around $2.40 per litre pre-escalation to nearly $3.00 by mid-March — a rise of roughly 23 per cent in under three weeks. Diesel rose further, up around 35 per cent or 72 cents per litre. The AA's principal policy adviser Terry Collins warned of "week after week" of increases, noting crude had surged from under US$60 a barrel nine weeks earlier to nearly US$93.

  That is an undeniable global pricing reality. But two questions deserve asking.

1. Are these prices rising faster than New Zealand's actual cost of importing fuel?

2. Why are some of the world's most Hormuz-dependent nations managing lower retail increases than a country with zero direct exposure?

How the rest of the world responded

South Korea — New Zealand's biggest fuel supplier

South Korea imports roughly 70 per cent of its crude from the Middle East and is genuinely, existentially exposed to the Strait of Hormuz. President Lee Jae Myung called an emergency meeting and announced a maximum price cap on petrol and diesel — the first time South Korea had intervened in fuel pricing since 1997. The government also activated 190 million barrels in strategic reserves (208 days of supply), explored alternative supply routes bypassing Hormuz, and cracked down on price-cornering by refiners.

  The cap worked immediately. Prices fell for three consecutive days after implementation.

  To be clear: New Zealand's largest fuel supplier — a country 70 times more directly exposed to the Hormuz closure than New Zealand — imposed hard price controls. New Zealand did not.

Japan

Japan imports 95 per cent of its crude oil from the Persian Gulf. Prime Minister Sanae Takaichi instructed oil reserve sites to prepare for strategic release, released roughly 80 million barrels from national reserves, and actively engaged in G7 emergency coordination.

Europe

Even European nations with relatively low direct dependence on Middle East crude saw sharp increases — Germany up 14 per cent, Austria 13 per cent within two weeks. Hungary capped prices entirely. Austria restricted how many times operators could raise prices per week (three increases maximum; reductions at any time). The G7 finance ministers held an emergency meeting.

China and India

Both nations are deeply Gulf-dependent. Both held retail fuel increases to single digits — China at around 11 per cent, India at around 5 per cent. China banned refined fuel exports to protect domestic supply. India secured an emergency waiver to purchase Russian oil cargoes at discounted prices. Both countries run permanent managed-pricing regimes that insulate consumers from the full force of spot market volatility.

Australia

Australia is perhaps New Zealand's most instructive comparison — same supply chain structure, same near-zero direct Gulf exposure, similar refining story. The Australian Competition and Consumer Commission opened a formal investigation specifically into whether prices were rising faster than supplier costs — exactly the price-gouging question. That is a regulator that understands its job. The ACCC’s Commissioner Anna Brakey stated plainly: “We are closely watching market behaviour and if there is conduct that is collusive or misleading or deceptive, we will investigate it and take action where appropriate.” Not watch. Not report. Investigate and act. Australian petrol rose roughly 31.8 per cent and diesel 40.1 per cent, described by GlobalPetrolPrices as among the sharpest in the developed world — and the regulator responded as though consumer protection was its actual job.

New Zealand's regulatory response: an anatomy of inaction

The Commerce Commission — New Zealand's market regulator — increased its monitoring frequency and issued public statements warning fuel companies. Commissioner Bryan Chapple stated that “nobody wants to see fuel companies using the situation in the Middle East as an excuse to unjustifiably increase prices at the pump.” That is the language of a disappointed parent, not a regulator. Nobody wants to see it. And yet it is happening, in plain sight, week after week. The Commission’s most concrete consumer advice: use the Gaspy app to find cheaper fuel. Across the Tasman, the ACCC launched an investigation. Here, we got a recommendation to download a smartphone app.

  Let’s be blunt about what is happening here. Fuel companies bought stock at pre-crisis prices, or at prices reflecting only modest early increases. They then repriced it at the pump as though Armageddon had already arrived — before a single tanker bound for New Zealand was delayed, while the country held nearly two months of cover. That is price gouging. Not alleged price gouging. Not potential price gouging. Price gouging. And the Commerce Commission’s response has been to say, in effect: we are watching, we are frowning, and we really hope they stop.

  There is a structural reason for this gutlessness. The Commission does not set fuel prices and has no power to control them. High prices are not illegal under the Fair Trading Act. The Commission can monitor, report, and "call out" companies. It cannot cap, freeze or compel reductions. Its enforcement toolkit is transparency — which, in a market dominated by five importers who have historically engaged in "price following" behaviour (adjusting prices in tandem without formal collusion), amounts to watching them do it in public — and writing them a note about it. The ACCC investigates. The Commerce Commission tweets.

  Then, at the precise moment the data was most needed: on 18 March, MBIE temporarily suspended publication of weekly importer cost and margin estimates from 13 March onwards, citing “volatility in the series.” The monitoring mechanism went dark at the peak of the crisis. In Australia, the ACCC was opening an investigation. In New Zealand, the only body with visibility into importer margins turned its own instruments off. It is difficult to imagine a more complete abdication of regulatory responsibility.

  Meanwhile, Resources Minister Shane Jones declared that fuel retailers using uncertainty to hike prices were “gouging the public” and that the Commerce Commission had “extraordinary powers to punish egregious market behaviour.” Consumer NZ CEO Jon Duffy called for the Commission to come down “like a tonne of bricks” on gougers. Both were right about what was happening. Neither was honest about what the Commission could actually do about it. Jones’s claim of “extraordinary powers” is simply false — the Commission has no power to cap prices, freeze margins, or compel refunds. Its enforcement response to a company charging $3.20 for fuel it bought at $2.50 is to publish a report saying it is monitoring the situation. It is a watchdog that cannot bite, presiding over an industry that knows it cannot bite, during the largest energy crisis in a generation.

  Finance Minister Willis, for her part, ruled out cutting fuel excise tax — saying it would send "the wrong signal" by encouraging consumption during a potential supply crunch. There is a defensible argument here in a genuine supply emergency. But New Zealand was not in a supply emergency as of mid-March. It had nearly two months of fuel stocks. The excise argument becomes much weaker when the problem is not a shortage but a pricing windfall being harvested by importers from a frightened public.

The structural failures behind the crisis

None of this happened in a vacuum. Three decisions compounded New Zealand's exposure:

1. The closure of the Marsden Point refinery in 2022. Resources Minister Shane Jones was quick to blame the previous Labour government for not preventing it. But Marsden Point's closure would not, as The Spinoff noted, have made any difference to current prices — the problem is the global cost of crude, not the refining step. What it did remove was any domestic buffer in the supply chain and a large volume of fuel storage capacity.

2. The cancellation of the Clean Car Discount in late 2023. EV fleet growth was exceeding 50 per cent annually while the scheme operated. When the Luxon government scrapped it, that growth collapsed to under 10 per cent. New Zealand now operates 815 light vehicles per 1,000 people — one of the highest vehicle ownership rates in the world — and every single one runs on imported fuel.

3. The design of the Fuel Industry Act 2020. The post-2019 market study found serious competition shortcomings in New Zealand's fuel market but responded with transparency mechanisms rather than price controls. The underlying philosophy — that sunlight is the best disinfectant — fails completely in a crisis, when sunlight does nothing to stop a company from pricing to market fear rather than market cost.

The "rockets and feathers" problem — and why it matters now

There is a well-documented pattern in New Zealand fuel pricing that predates this crisis and gives context to the gouging allegation. The Commerce Commission itself, before the Hormuz closure, had found that price increases pass through to the pump quickly — the rockets — but reductions take significantly longer — the feathers. This asymmetry was estimated to be costing New Zealand drivers $15 million a year even in stable conditions. In a crisis, the asymmetry is turbocharged. Prices leap at the first whiff of global disruption, long before the more expensive fuel is in tankers anywhere near New Zealand. When costs eventually stabilise, the reductions arrive slowly, if at all.

  Commissioner Chapple acknowledged this dynamic directly, stating that what the Commission would be "watching really closely is that prices come down at the same rate as they've gone up when prices turn again." Watch closely. Not enforce. Not require. Watch.

The scorecard

Country	Direct Gulf dependence	Pump price increase	Regulatory response	Regulatory verdict
South Korea	~70% via Hormuz	~10-15% (capped)	Price cap — first in 30 years; strategic reserves activated	Decisive
Japan	~95% via Hormuz	Moderate (capped)	Strategic reserve release ordered; G7 emergency coordination	Proactive
Germany	~14% via Hormuz	~14% in 2 weeks	G7 emergency meeting; IEA reserve release	Active
Hungary	Low-moderate	Moderate (capped)	Hard price cap introduced immediately	Interventionist
China	~40-50% via Hormuz	~11%	Export bans on refined fuel; managed domestic pricing	Controlled
India	~60% via Hormuz	~5%	Managed pricing; emergency waiver on Russian oil	Managed
Australia	Near-zero direct	~32% petrol; ~40% diesel	ACCC investigation opened; IEA reserve release; conservation orders	Investigating
New Zealand	Zero direct	~23% (+50c/litre)	Increased monitoring; "use the Gaspy app"	Absent

The verdict

The argument that New Zealand's prices must rise because global oil prices have risen is partially true and entirely insufficient as a justification for what has happened at the pump. Global markets price risk — including the risk that supply might tighten for our suppliers in future. They do not justify retailers repricing fuel already in the country, already paid for, at crisis-level margins before a single tanker bound for New Zealand has been delayed.

  New Zealand's regulatory framework was not designed for crises. It was designed for a stable, competitive market where transparency nudges behaviour over time. It has neither the legal architecture nor the political will to do what South Korea, Hungary, China, India and others have done: protect consumers from profiteering under conditions of manufactured fear.

  We are, to put it plainly, a country that generates 85 per cent of its electricity renewably, yet runs a vehicle fleet almost entirely dependent on imported fossil fuels, with inadequate strategic reserves, no refining capacity, a regulator with no price-setting powers, and a government that responds to the largest oil crisis in a generation by suggesting people slow down a bit and use an app.

  The fuel companies know exactly what they are doing. The Commerce Commission knows they are doing it. And beyond writing them a strongly worded letter, there is not a thing anyone can do about it.

  That is not a market failure. It is a regulatory design choice. And someone chose it.